Diversified chemicals company AECI delivered a strong performance for the six months to June 30.

The trading environment began to normalise during the second half of 2020 following the world’s recovery from the initial waves of Covid-19 infections. This improvement trend continued into this year, but CEO Mark Dytor on July 28 noted that the recovery “has not occurred at the same rate internationally and across all sectors of activity” for the company.

During an interview with Engineering News, Dytor highlighted the AECI group’s resilience during the pandemic, stating that, while the impact thereof this year “has been uplifted”, the company is still seeing the aftermath of the pandemic on its operations and customers.

The global and South African economies having not yet fully recovered from the pandemic, constraints in shipping (both in imports and exports) still being experienced and an inability to access containers and raw materials were some of the challenges that AECI’s supply chain experienced.

In spite of this, Dytor said the health and safety of people “remain paramount” during this period.

Meanwhile, whereas the US and Chinese economies are on rapid growth trajectories, others are lagging. That includes South Africa and Europe.

The net asset value per share attributable to ordinary shareholders decreased by 9% but basic earnings a share increased by 117%. Headline earnings per share (HEPS), meanwhile, were 529c, or 120%, higher than the 240c reported for the prior comparable period last year.

In terms of AECI’s overall financial performance, all of the group’s businesses were operational in the half-year, unlike in 2020 when restrictions associated with mitigating the spread and effects of the coronavirus required some of its businesses and those of its customers to scale back or suspend their activities.

In the prior corresponding period, management estimated that the impact of the Covid-19 pandemic on revenue and profit from operations was R1-billion and R454-million, respectively, with the negative effect on HEPS having been estimated at 294c.

While there was a strong year-on-year recovery, some markets have yet to return to pre-pandemic levels, Dytor lamented during a virtual presentation of the company’s results on July 29.

Revenue increased by 5% to R11.8-billion, though growth was restricted by some considerations. This also affected the improvement in earnings before interest, taxes, depreciation and amortisation (Ebitda) and profit from operations.

Considerations included that not all mining customers on the African continent have resumed their operations, as some remain on care and maintenance, while four of AECI’s large customers in the oil refining and industrial sectors had not resume their operations in the period.

Last year’s sanitiser order at AECI Schirm did not recur, and the stronger average rand foreign exchange rate against the dollar and the euro were also taken into account.

Ebitda was more than R1.4-billion, 23% higher than 2020’s R1.1-billion. Profit from operations increased by 70% to R948-million.

Headline earnings increased to R559-million from R254-million in the prior corresponding period.

Given the progress made by the company in its recovery from the effects of Covid-19, the board has declared an interim ordinary cash dividend of 180c, which is about 80% higher than the 100c declared for the half-year ended June 30, 2020.

Commenting on the recent civil unrest in KwaZulu-Natal and Gauteng, Dytor told Engineering News that AECI was “quite fortunate” following the events in these provinces, as its assets were left “unscathed” and in “good working condition”.

AECI, however, had to close operations in KwaZulu-Natal for the week during the civil unrest to ensure the health and safety of its employees in the province.

Dytor bemoaned the temporary closure of the N3 as the largest impact following the civil unrest, as the route is a “major gateway” between the ports in KwaZulu-Natal and Gauteng.

“It took us about four days to start getting trucks coming through with products, but also products that were in the port. I think there are lots of lessons to learn from [the experience].”

The overall estimated impact of the civil unrest and subsequent looting is a loss of about R50-billion to the South African gross domestic product, Dytor said.